Running a business: Accounting for employer-related taxes
Accounting for fringe benefit tax
You must pay FBT on any fringe benefits (perks) you provide to your employees.
Fringe benefits cover most of the benefits you give to employees in addition to their salary or wages. Examples are motor vehicles, low-interest loans, free or discounted goods and services, and employer contributions to sickness or death benefit funds. See more on what qualifies as a fringe benefit.
Are you providing fringe benefits?
When you register as an employer, you indicate whether you will provide fringe benefits to your employees.
In some cases you may not initially provide fringe benefits but at a later stage you begin to provide them. If so, please contact us at Inland Revenue to let us know about the change.
Filing an FBT return
You will file one of the following kinds of FBT returns:
- Fringe benefit tax annual return (IR422), which covers the year ended 31 March and is due on 31 May
- Fringe benefit tax income year return (IR421), for a company with shareholder-employees, which covers the company's accounting year and is due at the same time as the company's due date for paying its end-of-year income tax
- Fringe benefit tax quarterly return (IR420), for employers who must file an FBT return each quarter. See more on quarterly returns in regard to due dates and which employers are required to file them.
Penalties and interest may apply if you do not file your return by the due date.
Payment difficulties?
As with other taxes it is essential to budget for FBT. Find out about your options if you have difficulty paying. If difficulties are encountered it is to your advantage to enter into an arrangement prior to the due date. By entering into an arrangement prior to the due date you will reduce the penalties payable providing the agreed arrangement is adhered to. You may enter into an arrangement by phoning the department, however there may be instances where additional information is required or the department is not prepared to enter into an arrangement. If you require debt assistance you should ring 0800 377 771.
Date published: 14 Jan 2005
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